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tv   Nightly Business Report  PBS  October 21, 2014 7:00pm-7:31pm EDT

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this is "nightly business report" with tyler mathisen and susie gharib, brought to you in part by. >> the, featuring stephanie link who shares her market insights, the multi-million dollar portfolio she manages with jim cramer, you can learn more at the the s&p 500 logs its best day of the year, the dow back for 2014, are the steep drops you saw behind us? and estimates after the closing bell, is the turnaround there on track and could the results help shape the trading day tomorrow? and tarnished icons, coke,
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what they're doing to reconnect with consumers, all that and more tonight on "nightly business report" for tuesday october 21st. good evening, everybody, and welcome, remember last week's big selloff when everyone wondered when the bull market croaked? well, neither do we, upbeat news, news that the european central bank may buy up corporate bonds to boost the struggling economy. you have gains for the spe 500 and the nasdaq, seeing gains on apple and other technology shares, here is how things looked when the closing bells were rung, dow raced up 215 points, third straight day of gains pack in positive territory for the year, nasdaq up 3%, a 2.5 jump on the session, s&p 500, up 37, its biggest one-day
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gain all year long. bob pasani has more on today's market action on the floor of the new york stock exchange. stocks rallied big behind the highs, why the melt-up, several reasons, first, traders believe the fed will be dovish during the week next week, second, apple stabilized causing concerns about inflation. finally, ebola fears have eased. now, does this mean the coast is clear for everything? of course not. oil could quickly drop and another outbreak of ebola would renew those fears quickly. here is another problem, there is nine weeks left in the year and the hedge funds are panicking again, a lot of hedge funds need to invest again, that is right, a lot of them sold the s&p at 18.20 and are clearly trying to buy it back at 19.30,
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they need to dramatically buy stock, because it was under-performing. to have a chance to do anything they're forced to buy stock at this point, nine weeks could end your career. that means stocks could easily rise for another few days while these funds play catch-up. for "nightly business report," i'm bob pasani at the new york stock exchange. and strong earnings from yahoo! after the market closed today could help the stock market rally tomorrow. the internet portal earned 52 cents a share, way above wall street's estimates of 30 cents a share with revenues rising more than expected despite another drop in yahoo!'s on-line advertising business. revenues topped a billion dollars for a gain of 1% with a good chunk coming from mobile devices, yahoo! shares were initially higher in after-hours trading. bertha coombs has more. >> one big take-away is really
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where are they going to grow this company. several times on the conference call they say they're committed to making this one iconic company and returning it to greatness, what the investors really want to know is where is the road map and what will you do next? they will get an awful lot of cash, they already got some from alibaba, a lot of investors want them to make a good acquisition and move more into mobile. mobile is a standout this quarter, for the year they expect to get about $1.2 billion in mobile ad revenue. but consider that that is less than what facebook does in one quarter. so they have a long way to go here. >> and everybody is going to be watching that company carefully, bertah, thank you so much, reporting from the nasdaq. and folks not all the earnings news were good today,
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coca-cola and mcdonald's both struggling last quarter because of changing consumer taste, changing times and a strong you u.s. dollar. shares of coca-cola down 6%, mcdonald's a fraction lower, imagine how much higher the dow may have been if those two had posted better earnings. sarah eisen has more on the numbers. >> reporter: when it comes to what we eat and drink, consumer tastes are shifting fast, they want it fresh, natural, good for you. and giant consumer companies are trying to keep up. >> the reality i have not been changing at the same rate as customer's more specific expectations of us at mcdonald's. so we're changing. >> mcdonald's says it is ramping up marketing campaigns to emphasize the quality of their food and making their menu simple as they move their menu
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to similarities such as chipotle, and they're ditching their sugary soft drinks, coke said the volume of cases fell per strength 1% per quarter in north america. >> there is no question we need to improve our execution in many markets, especially consumer strategies. >> other energy and coffee drinks are more appealing to millennials, the equity investments are radical, but i guess they have been a little late to get into the non-cob, with good reason, than selling a carb soft drink, it is going to be a long haul. >> it is a double whammy because these companies are facing difficult challenges from
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overseas, a weaker european and china economy. both coca-cola and mcdonald's get stronger sales abroad, meaning they could cut into profits, the timing could not be worse. as results increasingly are highlighting who are losing cuts with more customers. it is some of the biggest most powerful brands for consumers in the world. and another story at a classic american brand, harley davidson, with profits dipping. they still topped wall street forecast. that sent shares of the motorcycle maker revving more than 7% higher today. morgan brennan has more on how harley davidson is shifting. it has been a rough year for harley, last month, 24 touring bikes were recalled. that is why they cut their forecasts in the summer and analysts expected lower profits, revenue and shipments this time
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around. but today's results showed something even more important. people are buying bikes again. retail sales of new motorcycles grew nearly 4% worldwide driving past expectations and up more than 3% in the u.s. harley's biggest market. >> they made it out of the very difficult spring selling season, moving retails through the channel, they have managed to launch some products out there in both the streetline and the road glides that are really well demanded and are sort of selling out quickly in the retail channel. that positions them very nicely for the spring selling season ahead of us. >> while the more classic touring bikes continue to be best sellers, hadrley's new street bikes added to sales as well. particularly outside the u.s. in markets like india and southern europe. street bikes are more important because they're part of the attraction to new riders to make
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up for diminishing customer core base, the new outreach customers grew in the first nine months of the year. and harley's new electric prototype is receiving feedback from riders to expand demos to canada next year. but the key is to entice the fans. >> i think what we're seeing coming out of the recession in 2009 is this continued interest and strength in the brand that people as they get more secure in their jobs and they feel more confident about the future particularly here in the united states that they're executing on that dream. we're offering them products like never before that really helped them compel them to be a part of davidson. >> and analysts warn there are plenty of head winds for harley. competition has ramped up. the stronger u.s. dollar has
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pushed revenue. a trend that could have an impact if it continues. and a few other dow components out with earnings ahead of the opening bell, share of each edging higher, verizon added new subscribers, united technology selling more aerospace gear, and the insurance giant travellers easily beat earnings estimates, estimates on higher investment income and fewer catastrophic losses. unemployment rates fell in 31 states in the month of september and rose in only eight of them. that is the smallest number posting an increase since april. the states with the lowest unemployment rates benefitting from the shale oil boom, with an increase of 2.8%, utah, just a eno notch higher at 3.8%. and georgia with 7.9%,
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mississippi and the nation's capital, washington, d.c. each at 7.7%. good news for any applying for a mortgage rate about right now, to spark the lower income borers, federal housing regulators approved new rules making it easier for lenders to package and sell mortgage-backed securities. they dropped a requirement that meant 20% down payment for borers unless the ending bank held a substantial amount of securitized loans on its books. more people buying homes again, existing home sales rose 10.4% in september, hitting the fastest sales pace since 2013. they represent deals struck in july and august, even the realtors themselves say the picture may not be so bright. diana olick reports. >> on a brisk sunday, they're
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looking at this split level. >> just trying to see the homes out here. >> but janet and her growing family just signed a one-year lease on a rental. they're not ready to buy yet. >> probably in the next year, more realistically, unless something really amazing comes up. >> sales rose over 2% in september but still are lower than they were a year ago, prices are also cooling, no longer doing the double digit jump since last year. >> it really turned into what i think is a buyer's classic market, the prices are coming down, the offers are even lower. it is a challenge for sellers. >> and the real estate confidence is at a one-year low according to the industry association. that may be because investors are moving out of the market, just 14% of september buyers and there are 6% more listings today than they were a year ago. >> the investor buyers, those
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are gold because it is all cash, easy, quick, they close, no problem. and so there are fewer of those now than they were before. more first-time home buyers, and that is -- on the buy side that makes for a harder transaction. >> there may be more buyers looking but they're still having trouble pulling the trigger. sticker shock and general jitters about the economy do not seem to be changing with the season. i'm diana olick in washington. still ahead, shape up or break up, why the head of the federal reserve has tough words for wall street's biggest banks. ,
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. a tragedy accident took the life of a french ceo christophe de margerie were killed on takeoff. a crash investigator told reporters that the snowplow operator was drunk, something that the driver's lawyer disputes, christophe de margerie was 62 years old. growing but slowing, growth in china would thrill most finance ministers but was the slowest since 2009. eunice yoon has more. >> reporter: i would like to say you have your panda huggers than
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dragon slayers, growth came in at 3% more than a year ago, the slowest the economy has been since the global financial crisis and many people are worried we'll see an even further slowdown. what is the problem? weakness in the property sector which is a major engine of growth here as well as a lot of debts. the chinese government is putting on its best face, and saw targeting. it also said that employment was stable. those comments are important because it tells us that the authorities are relative comfortable with the current level of growth and that beijing will likely continue with its targeted stimulus rather than anything dramatic, at least for now. for "nightly business report," i'm eunice yoon in beijing. shares of lockheed martin slumped after the company reported mixed results. third quarter earnings were better than forecast thanks to pension savings and higher production of the f-35 jet, but
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revenues came in below expectations. the company hiked its earnings outcome for 2014 but said sales and margins will drop. shares fell to 172.61. and kimberly clark coming up with earnings results, they will cut jobs, despite posting better than expected quarterly earnings, shares still rose almost 3% to 111.23. shares of aquen got hammered, the selloff came after they charged the company with foreclosure letters to borrow borrowers, this denied many of them to quickly correct loan issues, shares plunged to $21.48. and activist investor revealing his hedge fund third point built a stake in amgen, he
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is calling the company to sflit into two's shares rose almost 5% to 144 and change. ups boosting rates for a number of their shipping services by an average of nearly 5%. last month, fedex announced a similar price hike going into effect in january, share hs risg more than 2.5%. and amazon signing a book contract with simon and schuster, amazon has been in a long-running fight. shares of amazon popped 3% to 315.33. and michigan governor rick schneider signing legislation discouraging tesla from selling electric cars through company stores instead of through a dealership. general motors was one of the
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backers urging the government to sign the bill. states such as texas have banned the sales, similarly, daimler shares down initially, before the close shares were 2% higher at $235.34. the nation's biggest bank facing a huge fine from european regulators from conflispireing. j.p. morgan slapped with a fine for what the european commission calls taking part in financial cartels to manipulate the swiss bank derivatives. and president of the new york federal reserve bank said that even after the financial crisis some wall street banks were fostering a culture of unethical behavior. mary thompson joins us with more on the dressing down of the
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banks by bill dudley. who was there and what was he going after? >> there were about 80 people in attendance, including names like morgan stanley, j.p. morgan and aig. basically the firms were told by dudley the head of the federal reserve and fed governor daniel torillo, the companies better clean up their acts because they're sick about acts such as with j.p. morgan. they don't want to hear about bad business practices at all. they want them to fix what the federal regulators have been trying to fix for a while. >> you say break up what? >> break up the mess, dudley questioned whether these firms were too big to handle, citing big losses at places like aig. torillo said if they fail to
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police themselves better, they would have no choice but to impose more punishment on the fi firms. t the fed federal regulators banks should do to police better? >> they did have a couple of suggestions, some of it centered on compensation, a deferred compensation up to ten years, pay bonuses in debt equity, and self-report to regulators. also, they told them think about your public image. now, these suggestions may be a hint of something else coming down the road. keep in mind the federal reserve has been criticized by congress. it was a bit of a public image burnishing as well, but it opens conversation on the additional franchise ahead. >> all right, mary thompson reporting. and why the california beer industry is hitting a dry spell and what it is doing to solve the problem.
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the airlines are raising fares despite falling energy costs and fears about ebola. the major airlines have approved a four dollar round trip fare hike. jetblue kicked off the increases last week, and delta and southwest jumped in, united and american soon followed suit. the fare hike suggests the industry believes the demand to fly is still very, very strong.
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some troubling news for apple, coming just a day after posting the blockbuster quarterly earnings, apple's storage firm has been hacked with hackers potentially gaining access the pass words, contacts and other user data. now apple called the breach intermittent organized cloud attacks saying the servers were not compromised and the attacks didn't impact the sign-ins via the operating system. another big u.s. retailer a victim by hackers, staples now investigating a possible data breach. stores up in the northeast after several banks noticed what appeared to be fraudulent charges on credit cards. in a written statement, staples said quote, we take the protection of consumer information very seriously and are working to resolve the situation end quote. the chain said that customers won't be responsible for fraudulent charges on their cards so long as they report it very quickly. meanwhile, a new survey
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found that nearly half of all holiday shoppers say they won't go to retailers that have been hacked. that is according to credit which also found that about half of those surveyed said that security breaches would be more likely to pay with cash. a sobering look now at how the drought out west is impacting beer drinkers. there wouldn't be a dry eye at the bar. jane wells has the story. >> reporter: how many bottles of water in the beer on the wall? a lot. >> beer has to have water. >> reporter: more than 90% of that bud is water. and one brewer said it could take seven gallons of water to make one gallon of beer, that is a problem in california, where there is not much water left. it is impacting everybody in the brew industry to beer giants like anheuser busch which is operating a brewery in l.a. for 65 years, at budweiser, they're
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using the landscaping for cleaning. >> since 2009 we reduced water use 39%, 9% in the last year and we're targeting 10% in the following year. >> the wine industry, has a crush once a year. we have a crush every day if you want to use that phrase. >> reporter: up in cloverdale, kansas, bear republic depends on the russian representatiiver wh turned into more of a stream. but when they wanted to double in size because of sales, the city said no way so the brewery paid more than half a million dollars in impact fees to give the city the cash they feed to drill. >> so we were able to actually drill these wells last october before the third year of the drought began and became quite severe. >> reporter: still, long-term, it may not be enough. already some craft brewers are
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expanding on the east coast, partly for water. >> can you imagine the drought like this over the next ten years, i think you will see a lot more than breweries. you will see the major agricultural areas picking up and going somewhere else. >> leaving california high and dry and crying in its beer. for "nightly business report," jane wells, los angeles. and finally, americans last year took the least amount of vacation time in nearly four decades, and in so doing they forfeited billions in compensation, they used just 21 of vacation days last year, because of employees who forfeit than those who take all their time off, the group says it results in $50 billion in time off, not to mention stress. >> i believe in vacation, just take them. use them. >> that is "nightly business report" tonight, thank you for joining us, i'm susie gharib.
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and i'm tyler mathisen. have a great evening, we'll see you back here tomorrow night. "nightly business report" has been brought to you in part by. >> the, featuring stephanie link who shares her stock picks and market insights with action alerts plus, the multi-dollar portfolio she manages with jim cramer, you can learn more at the
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